We Study Billionaires - The Investor’s Podcast Network - TIP 112 : Billionaire Paul Allen - Idea Man (Business Podcast)

Starting point is 00:00:00 We study billionaires, and this is episode 112 of The Investors Podcast. Broadcasting from Bel Air, Maryland. This is the Investors Podcast. They'll read the books and summarize the lessons. They'll test the waters and tell you when it's cold. They'll give you actionable investing strategies. Your host, Preston Pish, and Stig Broderson. All right. How's everybody doing out there? This is Preston Pish, and I'm your host for The Investors Podcast.

Starting point is 00:00:34 And as usual, I'm accompanied by my co-host, Stig Broderson, out in Seoul, South Korea. Today, we have a book for you. And this one is called Idea Man, a memoir by the co-founder of Microsoft. And this was written by billionaire Paul Allen. And for anybody who doesn't know who Paul Allen is, he is the guy who was the co-founder of Microsoft and head programmer along with Bill Gates to build the whole. Microsoft Enterprise. I think Paul really kind of goes completely unnoticed when talking about Microsoft. Everyone just says Bill Gates, Bill Gates, Bill Gates, but you read this book, and I think that you do a little bit of homework on how Microsoft got started, and you'll see that Paul Allen had a enormous part of what Microsoft ultimately became.

Starting point is 00:01:25 And I want to hear your thoughts on that. I don't know if you feel this way, Preston, but I almost had this. impression that Bill Gates, he founded the company, and there was someone named Paul or something, he was like his helper. Clearly, I'm laughing at some saying this, but I haven't thought too much about it. Clearly, I would know Bill Gates, and I was kind of sure that there was some other guy at some point in time, perhaps in the beginning, but I didn't know there was actually a real partnership before I read this book. So I'm just going to throw out my opinion. I love this book. I really enjoyed reading this because it's almost like you got.

Starting point is 00:02:00 the second story. You know when you hear a story from a friend and they're like, and it sounds like it's too good to be true? And you just want to hear the other person's side of the story. And after you hear that, you're like, oh, it all makes sense now. Like everything comes together and it all makes sense now. That's kind of how I felt about the whole Microsoft story after reading this book. It made total sense because you were then seeing the other vantage point, which was awesome. I think that's probably why I liked it so much. And I see Stig, you're not in your head. You agree? Yeah, definitely. Yeah, I thoroughly enjoyed the book.

Starting point is 00:02:32 And another thing is that if you're into technical stuff, this is the perfect book for you. And we're also going to talk more about this whenever we're talking in details about the chapters. But he's also not only talking about the founding of Microsoft and what's happening in his personal life, he's also talking about the development of the personal computer, which for me was a discussion that I thoroughly enjoyed. So if you're super geeky like us, I'm sure you will enjoy it too. This book starts off, and the thing that I also liked about the way Paul organized his book was he really starts from the beginning. He starts from the time that they were just little kids. And you should see some of the pictures in the hard copy of this book of Bill Gates especially.

Starting point is 00:03:11 I mean, he looks like he is seven years old or something ridiculous. But these two were just little, tiny kids. They don't even look like they know how to read in some of these pictures. and they're sitting at this Altair computer that was like the very, very beginning. At the very beginning of programming, personal computing, these two are there nugging away at their private school. And that's something that Paul Allen talks about is this relationship with Bill Gates because they both went to a private school.

Starting point is 00:03:42 Their parents paid a little extra money for them to have the privilege of going to a fantastic school. And one of the perks that this school had was they had purchased shared time. on an altair. And the way that these altars worked is they basically went into a larger server for computing. And so they're there basically on this computer writing code and testing things out. And I mean, you're dealing with punch cards and all sorts of things back in the day. And so these two just developed the total fascination with this thing.

Starting point is 00:04:14 They were there. Every waking second is the way that I read it from the story. Any spare moment that they had, they were sitting at this computer just programmed. until they're just falling asleep at the thing because they liked it so much. And it also talked about this rivalry that these two had back and forth to see who was smarter and more intelligent. They were highly competitive with respect to intellect. Paul Allen, how many years older was he stick?

Starting point is 00:04:40 Like three or four years older than Bill Gates? Yeah, perhaps it says here that he was actually the 10th grade, I think, and he met Bill when he was in his eighth grade, but I don't know the age difference. And the thing to understand here is that Bill Gates, he might be 14th, like when he was introduced, but he looked like he was, as you said, Preston 7, 8 years perhaps. You got to see some pictures. It's hilarious. The thing that I like so much about this is Bill Gates was spunky at that age.

Starting point is 00:05:08 So, like, he might have looked like he was 7 or whatever. But, I mean, he was really kind of boss and Paul Allen around as a 10th grader and just really kind of authoritative and almost like a dictator like at such a young. age. And so all those stories kind of came out. It was pretty awesome to hear these firsthand accounts of this back and forth of this young, like little torpy Bill Gates. Yeah, I was impressed about how Paul Allen recall some of the conversations that they had because Paul Lennon, he was into all the technical stuff, and that was all that he talked about. And then what Bill was talking about was, well, I just read this in Fortune magazine, and I have this plan of how we can hire 35

Starting point is 00:05:49 programmer and eventually turned into a Fortune 500 company. And this was a kid. I mean, he was an eighth grade. And he's almost had like a business plan on how to, you know, build a Fortune 500 company. I mean, he was just so much ahead of his time. I was thirdly impressed by this. Well, I think it goes back to one of these major themes that we see on this show is this kid was thinking, not big, he was thinking enormous at like 13 or 14 years old.

Starting point is 00:06:17 what he's talking about owning a Fortune 500 company. How many kids at that age do you think are saying that kind of stuff or even thinking it? I mean, like none. So this is how this guy was thinking right from the start. And so Paul Allen, Stig nailed it. I mean, he was the technical guy. He's talking about assembly language, like how he can program ones and zeros because that's where his interest was.

Starting point is 00:06:38 He had this real interest on how a person could literally communicate with a computer through assembly language, where Bill Gates was thinking much more bigger picture, how could I write a program that I could monetize and sell and build a business? And so you can see how these two went together like peanut butter and jelly. Yeah, and Bill might come off like he was the businessman. That was all he could do, but he was an amazing programmer. And I have two things I want to mention here. The first thing is that Alan actually had to say that at that time, whenever you were educating yourself, you needed to be an efficient programmer because there were no memory on these computers. So you couldn't waste any memory at all because you have to be so efficient.

Starting point is 00:07:18 And he said there was a huge advantage that his generation had compared to later generations. Another thing was that Bill Gates basically wrote a language for the Alchair machine in five days. That was something I was very impressed about. He said he needed time to think about the architecture or how he was doing it. But he actually called Paul and we'll probably get to the story later, but he actually called Paul and said, I figured out how I wanted to write it. I'm locking myself into a hotel room. Then he spent five days. He sent the files to Paul and said, debug it, presented to the management.

Starting point is 00:07:51 And that was it. And it worked. How amazing is that? I just want to put that up for the records like Bill Gates, a gifted programmer, if you ever saw one. Now, if you hadn't heard one of our previous episodes with the Malcolm Gladwell book, he did a really interesting discussion about how Bill Gates and even Paul Allen at this point had put in so many hours at a point in time that was, you know, how many people at their age had this kind of access to this kind of computer that was just brand new on the market

Starting point is 00:08:23 where you could start programming? And these guys were putting in hundreds upon hundreds of hours of learning at such a developmental stage in their life that they were literally just a landslide ahead of anybody when it came to competing with them when they were in their 20s. They were just light years ahead of people because of this. And that was a great highlight in his book to talk about how much an advantage they had. Definitely. So if people want to check that out, it's episode 24 on the Investors podcast. And it all talks about, and I don't want to deviate too much from actually the book here,

Starting point is 00:08:58 but I think it's a great point that it's about how fast can you get to those magical 10,000 hours where you really master a skill. And Paul Allen and Bill Gates could do that pretty fast because they had the access when almost no one had that. Another thing was that this is just like a side story that I found really amusing was that they actually didn't have unlimited time because they needed to use the punch cords, but they actually hacked the system so they had unlimited time. When they looked at the logs, they're like, these guys are literally living on these computers. Like, they're not even getting off of them.

Starting point is 00:09:31 This is like 24 hours a day that these two were sitting on these computers because it was expensive. It was really expensive to get even a sliver of time on these servers. and these two hack the information. I guess they were, I can't remember exactly how the story went, but they dove into a dumpster where they were able to pull some paperwork from a company to basically use the account access from some of the people when they were at home, not using their lot of time. And these two were logging in and, oh boy.

Starting point is 00:10:01 And then they got in all sorts of trouble. And then it happened again when Gates, he goes to Harvard. And Paul Allen talks about how he literally moved to Bob. Austin to be out there by Bill Gates and Gates had access to some of the computer labs there at Harvard. Well, Gates gave Paul Allen his passwords and his access to get into the Harvard campus to basically use the computer time that Gates had when he wasn't using it. And so these two were continuing, literally moved across the entire country together to

Starting point is 00:10:34 continue their programming habits because they were so addicted to programming. I just, for me, I just freaking love this story. I found it just so entertaining to hear some of these firsthand accounts of these two and how obsessive, compulsive they were over programming. It was unbelievable. So anyway, they're there at Harvard. I want to say he was in his third year at Harvard.

Starting point is 00:10:56 Do you remember when they got the deal here or the Mitz deal? Yeah, probably even sooner than that. The way the story goes was that they wrote this programming language basic for the Altair machine. and it needs to be pointed out they actually haven't had access to the hardware by then. They actually just wrote it and it worked. Well, they wrote

Starting point is 00:11:15 a simulation for the computer in order to simulate the computer that they were writing the software for, they basically adjusted some of the code and wrote a simulation program and then wrote the program and put it into the simulation to so they had never been able to test it out

Starting point is 00:11:31 on the actual device that they were programming, which I find absolutely amazing to tell you their intellect at this level. They're 20, 21 years old at this point. Yeah, and it was a funny story because they actually called up the owner of El Tal Mitch and said that they can actually do this and they actually had like a language ready for them and they didn't. It was just like a way to test the system. So this was the issue here. The issue was that Paul at that point he actually grew a beard. So he was like the old one. And Bill Gates, he wasn't old enough to meet people at bars. So back then you were two

Starting point is 00:12:02 meeting people at bar and restaurant. He wasn't old enough to drink. So they actually arranged that only Alan should go because he was the one that actually looked like he was an adult. So this was really like, it was just so many entertaining stories because there were like two youngsters, teenagers, early 20s behaving like there were 12 meeting up with grownups. And that was just another part of the story that I thoroughly enjoyed. Let's take a quick break and hear from today's sponsors. All right.

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Starting point is 00:16:39 So, Paul Allen was going to call down to the Mitz company to talk to Ed Roberts, who was the guy who basically needed the basic software for his new computer. But Paul couldn't muster up the courage to basically call down there and pretend like they actually had a company or even pretend that they had a program because they hadn't even written anything. And so Paul Allen said, Bill, you've got to talk to him. You've got to do the talking because you can sound all official and like you're actually a real business. And so Bill decided, okay, I'll do that. So he called and they

Starting point is 00:17:11 basically said, yeah, come on down here and show it to us. And then that's when they made the decision that Paul now had to go and actually represent Bill Gates's voice because he looked like he was old enough to actually own his own company. And then he got down there and didn't have enough money for his hotel room, which was funny. They were a mess. But they pulled it off. So they got down there, like we said, they wrote a computer program for a device that they didn't even have. And they go down there to Texas, where they had to fly down to. Paul Allen goes down there with the code. And they run it and it works the first time.

Starting point is 00:17:44 And they were able to print out what was it, 2 plus 2 equals 4. He printed 2 plus 2 equals 4. And the gentleman admits who was going to pay them for the software looked at like, holy mackerel, this thing just did a math problem. That is totally insane. So really cool story to hear all this stuff firsthand is just amazing. All right. So after they got this contract, basically building the basic software for this newer personal computer that had come out, they really saw this as a huge opportunity that needed to be capitalized on. And so Bill Gates made the hard decision that he was going to drop out of Harvard and basically take a leave of absence and that he would go back and figure.

Starting point is 00:18:26 finish out his degree is what he had told his parents because he had to take advantage of this opportunity and this was a once in a lifetime opportunity. And that's exactly what they did. So these two left. They continued the program just like they were back when they were in middle school and high school at their private school together. And they just continued to write more and more code and work licensing deals and all sorts of things as they expanded. And this really shows you the brilliance of Bill Gates. So when they were writing the contract with this company, how many kids, let's just call them 21 at this point, would have the knowledge to retain the proprietary piece that they could license this to other companies outside of the Mitz

Starting point is 00:19:12 company that gave them the initial contract to put it on their personal computer. But that's where Bill Gates was at. Now, let me caveat that with Bill Gates's dad was a lawyer. So you know he was getting some type of advice from his dad, who was obviously a smart person. But still, to have that business sense to be thinking through, you know, most people, they're so darn excited, they got a deal that they just, you know, jump at it and then figure things out later. This guy was like, he was more concerned about having certain clauses in the contract for growth than anything else. And I mean, he was savvy. He was ridiculously savvy. And in another area when he was savvy was whenever they formed a partnership contract because it really was a partnership and you would be thinking so that

Starting point is 00:19:56 was 50-50. But Bill Gates, his argument was that since Paul Allen was getting a salary, because Alan was actually collecting a salary from Mitch working in his company at this part and time. So he said, well, since I'm dropping out, I should have at least 60%. And also because I wrote the code for this. And Paul Allen was like, yeah, that's probably fair. And I think in some ways you might think it's fair, but I think that was probably also where the dynamic of the partnership really changed, because it's weird if it's not really a 50-50 partnership. It misses up things. And Bill Gates even went out to change the agreement at a later point in time where he wanted 64%. Preston, you could just sense how bitter Paul was at that. I mean, with all the billions

Starting point is 00:20:43 of billions of billions he could have more billions. I don't think it was because of more money, though, it was like the principle of he was feeling that his contribution was diluted, not in terms of shares necessarily, but what the shares represented, I guess. You know, the book was written by Paul. So it's his opinion. So you're really getting that biased as you're reading this because you really get drawn into the story. And for me, he was very likable in the story.

Starting point is 00:21:08 But for me, when I was reading this, I got the impression, wow, Bill Gates is really greedy, really not a team player. at this point in his life when he was doing those kind of deals. I mean, he was in his 20s. I just got a sense that he was very greedy and just all about himself and not really looking at this as a 50-50 partnership with his longtime friend and partner. I'm sure there's the Bill Gates side to this. You know what I mean? I'd love to hear how Bill Gates thought through this and why he felt that he needed an extra 4%.

Starting point is 00:21:41 To me, that was just crazy for him to be arguing with this guy that. he's been in the trenches with since day one to one another four percent. I mean, that's crazy. Yeah. Crazy greedy. And you know, Bill Gates might look at it today if you'd ask him about him, and be like, yeah, you know, that was wrong. I don't know what he would say. Who knows? But that's how it was displayed in the book and, you know, I think it's worthy of mentioning. But I also think that one should not just look at Paul Allen as the naive tech guy and not like the service business person. He's actually talking about where he's considering whether or not they should be in Seattle or if they should move out to California.

Starting point is 00:22:20 And he actually had this idea that he would rather be in Seattle because there were less distraction. And he was talking about it was raining more and raining was good because that meant the program would sit more indoors and actually put in more hours. So, I mean, I just also want to put out of for the record that Paul Allen, he seemed like a super nice guy, but he was also when he needed to be a very cynical and tough businessman. So I guess it was not just Bill Gates, who was also really tough running the show and then Paul Allen not having any business sense at all or that he could make the tough decisions or a thing in terms of money. He definitely were capable of doing that.

Starting point is 00:22:56 And just as a highlight, so the reason they were thinking of moving back to Seattle was the reasons that Stig mentioned, this is also where they grew up. And this is also where they went to school through high school and everything. So they had an interest in going back there for family reasons as well. So as this matured, so Microsoft was a 50-person company, was a 100-person company, they worked dynamic deals with IBM. I think a lot of their brilliance was really understanding what their competitive advantage was through that growth period. And they were always the guys leading the pack.

Starting point is 00:23:31 They were never behind the power curve. They were always thinking, what is the next product that we need to basically lead the market into? And from the book, and again, this is very biased, it seemed like Paul Allen led a lot of that innovation and thinking. And Bill Gates was more of the guy that was in the execution mode to make it happen. He was more of the guy like, get it done. And that's why I think the title of the book is, Idea Man, is because I think that's how Paul really wants to be remembered, is he was the guy that was kind of feeding that innovation that needed to happen. And based on a lot of the information he provides in the book, I think he justified that opinion and back. it up pretty well. Later on, when Microsoft became pretty big, Bill Gates had a longtime friend

Starting point is 00:24:14 from Harvard that he brought into the company. And this was Steve Balmer. And Paul Allen highlights from his perspective how all of that went down. And it was not a pretty scenario from Paul's vantage point because they had come to an agreement on a certain amount of equity that Steve Balmer was going to receive by coming into the company. And then Bill Gates basically doubled it and never even told Paul and made him the offer of double the equity that they had previously between Paul and Bill had come up with what they thought was reasonable. And so Paul felt completely stabbed in the back over the way that the deal went down. And so then Balmer comes in as basically the operations officer. and it really seemed like that relationship between Balmer and Bill Gates matured to the point where

Starting point is 00:25:08 it was really pushing Paul Allen more and more out of the company as far as his duties and responsibilities of what he was contributing. And it seemed to be more of the Bill Gates Steve Balmer show. And I think that left a very bad taste in Paul Allen's mouth. And when I was reading this, I got the sense that Paul has a, a lot of respect for Bill. Even to this day, I think that he really respects Bill Gates and I think that he has an admiration for Bill Gates.

Starting point is 00:25:40 I think that he feels like Bill Gates screwed him at certain points in his life. But I still think that they have a reasonable relationship with each other. And I think that they will absolutely, that's the impression I got from the book. Now, this book was written in 2010. And, I mean, there's some things in here that said about Bill Gates that are definitely not something that I think anyone would once said about themselves. And so I'd be really curious to know how this was received by Bill Gates and how their relationship matured after this. Oh, what's this interview that was published not long after the book?

Starting point is 00:26:10 I think it was in 60 minutes. And they asked Paul Allen, so what did both think about the book? And he said, I don't know. I know that he'll read it, but I actually don't know. And then they reached out to him. And apparently the response was that Bill Gates said that he was really glad that it was highlighted that Microsoft was a partnership because he didn't feel like Paul Allen was giving the respect that he was supposed to have from Microsoft. And I know of this was, perhaps it was also the political correct answer. I don't know.

Starting point is 00:26:40 But I thought, actually, that was a really warm response. And I think that whenever Bill Gates, he's looking back, he can probably also see some of the mistakes that he made. But I want to say a few things here. The first one is that not all of them, but a lot of things that Paul Allen describes about Bill Gates is at a very young age. And I mean, if you literally are smart as a guy in the room and I guess that Bill Gates usually were that and you're in your early 20s or late teens, whatever, yes, you are probably obnoxious and I'd like to tell about how awesome you are all the time. I don't think anyone can see past that. I think it's more some of the situations that they incurrelator in terms of Paul Allen actually being very sick at some point in time and Bill Gates trying to buy him out.

Starting point is 00:27:21 And I think that was not nice to read. But again, as you said, Preston, that was one side of the story, Bill Gates might have experienced differently. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why VANTA is a game changer. Vanta automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a stock two or running an Enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security

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Starting point is 00:30:47 fundrise.com slash income. This is a paid advertisement. All right, back to the show. So let's talk about some of the stuff that Paul Allen did after he left Microsoft. So at this point, he was a billionaire in his 30s. And his current net worth, I think, is around 18 billion, somewhere around there. It's pretty high. So he had all this money after he left Microsoft because he still had an enormous portion of the equity. It was how much did he have when he left?

Starting point is 00:31:17 He had 28%. He had originally 36. and then they sold something to a VC company and also, as you said, Ballmore, he also got some equity. So he had an enormous part of the equity in Microsoft, had a huge sum of money. And so what does someone do after they have that large amount of money and aren't working for the company anymore?

Starting point is 00:31:38 Well, what Paul Allen did is he went out and bought a basketball team, a professional basketball team. So he goes out and he buys the Blazers, and he got deeply involved in being an owner of a basketball team, a professional sports team. Some other things that he did. So he got all involved into the X-Prize in doing this privatization of space, made huge capital investments.

Starting point is 00:32:06 I forget how much ownership he had of the spacecraft that actually won the XPRIZE. And then you had Richard Branson, who I didn't realize that this is the way that this worked, but Richard Branson came in and worked a deal with them at the very end after they knew it was successful to basically brand the spacecraft with the virgin name. See, I thought that Branson was involved with that from the very beginning and that like he was his brainchild, but it was actually not his project at all. It was something that he just kind of swooped in and basically paid to put his name on. I didn't know that.

Starting point is 00:32:37 So that was really interesting discussion. And I mean, that was a whole entire chapter, chapter 16 on that entire development of that thing. It was amazing. Yeah. And it's interesting, person now that we read Elon Musk's book about SpaceX. X and also Richard Branson's book, and now we're getting a third perspective of what really happened, which is probably somewhere in between. But it was really interesting to get that

Starting point is 00:32:58 perspective as well. Yeah. And you could even add Jeff Bezos in there as well with the everything story. All these guys seem like after they make a billion, it's like, hey, you got to start your own space company, part of the requirement. So this was another really interesting dynamic to Paul Allen. And I think this shows you how robust this guy's repertoire is. So not only is he probably one of the best programmers on the entire planet. He goes out and he owns a sports team and he's doing that successfully. He then does the space thing successfully. Then he has this obsession with Jimmy Hendricks and he plays the electric guitar like a fiend. And so he goes out and he basically creates this entire museum around Jimmy Hendricks. And it's a really interesting story

Starting point is 00:33:45 about how the family that owned all the Jimmy Hendrix music got basically bamboozled into giving away the copyrights to all of his music and stuff like that. And then Paul Allen kind of helped the family get the copyrights back and built this museum around it because he's just a huge Jimmy Hendricks fan. So he has this music side to him. He has this really creative side and this programming side. It's just amazing all the stuff that this guy has done. We're just going to hit on this real fast stick, but this wired world, chapter 18 was also interesting where he invested huge sums of money in a cable company. And this ended up being disastrous for him in the long run. So that whole discussion, and it's a very long discussion in the book. And I think it's

Starting point is 00:34:27 very worth your time to read this book simply for this discussion, to see how he was making some enormous mistakes. And I think something else that I gained from this chapter was I think he really gained an appreciation for Bill Gates' talent as a manager and an executive to execute and to mitigate risks and to do real firm understanding of what to value, what not to value, because that was what Bill Gates was adding in this relationship. And I don't think Paul Allen really understood that until he went through this experience with trying to own this cable company and just being a total disaster for him. It's actually interesting when you look at what Paul Allen did after Microsoft,

Starting point is 00:35:10 is that he actually didn't really manage to make money after that. At some point in time, I think he was the third richest man in the US, something like that. And he actually, it's not that he lost all his money, but he had really hard time accumulating his capital, which was actually something that was really interesting. And he had a really hard time for the business ventures that he set up to monetize them. Yes, he did the space program and that was successful and his teams won a lot of gains, but in terms of setting up like his own company with Paul Allen in the driver's seat and actually making money and compounding his capital.

Starting point is 00:35:48 As far as I know, ever since, he actually didn't manage really to do that successfully. A lot of critics have been saying that he really needed a Bill Gates to pull it off and he always says, no, no, no, that's not the problem. It's been all the kind of other problems. But he actually didn't manage to do that, even though he's investing in a ton of companies with him in operations really to pull something through. And I think that's interesting. All right, Stig.

Starting point is 00:36:08 So after reading this book, we both liked it. What was your number one takeaway that you think you learned from reading this? Paul's reflections about the future of Microsoft, I felt that was really insightful. And especially his discussion about how he felt that Microsoft lost a love of opportunities in social media in terms of search engines. and also in terms of how the world is transitioning away from personal computers. And that was actually something that he already predicted in 2010, and he said that basically

Starting point is 00:36:41 he saw the personal computer in many ways to be obsolete. And it's really interesting when you look at Microsoft's business segments and how they're making money and where they're making money. It's interesting to see that it's really still a personal computer company. And I'm not saying that this is not the future and the future looks bleak for Microsoft. or anything like that. But I think it's interesting if you really break down where they're making money that it's in the operating systems for personal computers and that you have a division here in cloud, which might be the future. And then they have a division, the business processes

Starting point is 00:37:18 which is for the office package and the types of software that they have. And the thing is interesting that the three areas that he really pinpoints the social media and the user experience and the search engines, that's still areas where Microsoft are struggling. The way the poll talks about this in the book is that he feels it's a very big problem, like they're losing to Apple in terms of the smartphones, in terms of the user experience, people transitioning away from the PC. He's talking about how they're trailing Google. Google's global market share for searches that's 75% and Bing, Microsoft's browser,

Starting point is 00:37:57 actually second, but it's only with 8.4. So there's definitely still way behind and probably expect to be doing so for quite a while. And in terms of social media, this was also one of the things that Paul mentions that, I know I'm deviating a bit here from the book, but when I see the recent acquisition of LinkedIn, 26.2 billion, they are paying $196 per share. And the earnings per share for LinkedIn is negative 1.18. And I know that the people on Microsoft are super smart, but it seems to be a very expensive acquisition for something that they want to add to that portfolio rather than build on their existing competences and especially when you look at the price.

Starting point is 00:38:44 But the thing is, I'm not sure that it's so much of a problem that they might be trailing, call it Apple, Google, and Facebook. I mean, they have their own niche and it's not necessarily a bad thing. thing that other people have a huge market share in other parts of the market, if that's not where the main focus is. So this was my main takeaway from this book. Without Allen, this doesn't happen. And also without Gates, this doesn't happen. And I think when you look at both of these guys love programming, but beyond that common interest, Paul Allen was the guy that was really

Starting point is 00:39:24 seeing the direction that things were going. He was the guy who had the foresight. He was the idea guy. He was the one coming up with all these creative ideas on how to do it. Bill Gates was the guy that could actually do it. He was the guy who could execute. He's the guy who could give the orders to make it happen. And you can't have one without the other and build success.

Starting point is 00:39:46 You know, you can go out and you can study every single book in the world, but if you don't know how to actually put it into application and execute on that information and those ideas, the knowledge and the ideas are totally worth. And if you're the person who just goes out there and just starts running and starts executing, but you have no knowledge or no foresight, you're just running down the wrong path. And so you have to combine those two skill sets in order to get the excellence that you see that these two produced for decades when they were developing Microsoft. And that's the thing I really captured and took away from this book, because you've got to have both.

Starting point is 00:40:22 You just can't have one or the other. Okay, at this point on the show, we're not going to answer a question from the audience. Instead, we want to highlight an outstanding member of our community that has been making numerous contributions in a couple different areas. So he goes by G-Man on our forum, and G-Man has been making tons of contributions. In addition to that, he's setting up a local Investors' podcast chapter in Singapore. And so, gee, man, we just want to give you two things from Stig and myself. And that's a free subscription to Stig's chapter by chapter intelligent investor video

Starting point is 00:41:03 course that we have on our website on the TIP Academy. And also, we're going to give you a free subscription to our ETF video course. Both of these courses are a paid course that we have on our site. So we're giving those to you completely for free for everything that you're doing. And we can't thank you enough for all your contributions to the community. It really means a lot to us. Okay, guys, that was the end of this week's episode. We'll see each other again next week.

Starting point is 00:41:31 Thanks for listening to The Investors Podcast. To listen to more shows or access to the tools discussed on the show, be sure to visit www.com. Submit your questions or request a guest appearance to The Investors Podcast. by going to www. www. Asktheinvestors.com. If your question is answered during the show, you will receive a free autographed copy

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We Study Billionaires - The Investor’s Podcast Network - TIP 112 : Billionaire Paul Allen - Idea Man (Business Podcast)

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