Vanity Fair Paul Allen and Bill Gates

http://www.futureofcapitalism.com/2011/03/vanity-fair-paul-allen-and-bill-gates

Microsoft co-founder Paul Allen's book Idea Man is excerpted in the May 2011 issue of Vanity Fair. The link to the excerpt is here. Most of the press coverage (like this Wall Street Journal story) focuses on the negative aspects: "Bill Gates schemed to take shares in Microsoft Corp. from his co-founder during the early days of the software company following his partner's treatment for cancer," is the way the Journal article begins.

But what is striking to me in the excerpt is the way the early days of Microsoft — which created the fortune that for a time made Bill Gates the richest person in America — fit not the negative stereotypes of capitalists or rich people or entrepreneurs ("taking" from cancer victims) but the positive ones. Take the classic virtue of industry, or hard work. Here is Mr. Allen's account of the month in which he, Mr. Gates, and Monte Davidoff built what became Microsoft's first piece of software:

We moved into Harvard's Aiken Computation Lab, on Oxford Street...

We worked till all hours, with double shifts on weekends. Bill basically stopped going to class. Monte Davidoff, a Harvard freshman studying advanced math who had joined us, overslept his one-o'clock French section. I neglected my job at Honeywell, dragging into the office at noon. I'd stay until 5:30, and then it was back to Aiken until three or so in the morning. I'd save my files, crash for five or six hours, and start over. ...

I'd occasionally catch Bill grabbing naps at his terminal during our late-nighters. He'd be in the middle of a line of code when he'd gradually tilt forward until his nose touched the keyboard. After dozing for an hour or two, he'd open his eyes, squint at the screen, blink twice, and resume precisely where he'd left off—a prodigious feat of concentration.

Then there is the "rags to riches," or upward mobility aspect of it. Billionaires don't all start rich. Here is Mr. Allen's account of his visit to Albuquerque to demonstrate the new software to its potential purchaser:

Ed said he'd drop me at the hotel that he'd booked for me, which I'd thought would be something like a Motel 6. I'd brought only $40; I was chronically low on cash, and it would be years before I'd have a credit card. I blanched when Ed pulled up to the Sheraton, the nicest hotel in town, and escorted me to the reception desk.

"Checking in?" the clerk said. "That will be $50."

It was one of the more embarrassing moments of my life. "Ed, I'm sorry about this," I stammered, "but I don't have that kind of cash."

This is part of what it feels like to be an entrepreneur. You are working late at night and on the weekends, and you are short of cash. If it works out, you might end up as a billionaire or one of the richest people in the country. Even if you fail or succeed moderately or muddle through, what you are working in is your own in some important sense. But these elements — the hard work, the risk taking, the cash-poor periods early on — are so often ignored or lost in the political debates or discussions in the press about income inequality or about raising taxes on "the rich." Luck may have something to do with it for some "rich" people — those who win government-run lotteries, for example — but for a lot of "rich" people there are hard work and risk-taking involved. When those rich people are taxed at higher rates and their money is redistributed, what is really happening is that money is being taken from people who stayed up working on a business during college and given to people who spent their own time during college instead partying or watching television or sleeping.

by Ira Stoll  |  Mar 30, 2011 at 1:01 pm Related Topics:  Definition of 'Rich', Income Inequality, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list