Principles of Finance: Unit 9, Bill Gates: A Tale of Two Men

Bill Gates: A Tale of Two Men, by Charles Dickens. …Wait, that’s not right. We meant “by Shmoop.”

CoursesFinance Concepts
Principles of Finance
FinanceFinancial Responsibility
Personal Finance
Finance and EconomicsPrinciples of Finance
LanguageEnglish Language
Life SkillsPersonal Finance
SubjectsFinance and Economics

Transcript

00:19

then in technology ibm was like google plus facebook plus

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apple today Big fat behemoth enormously connected in the highest

00:28

echelons of corporate america and the world for good reason

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Ibm was the acronym you got when you slightly shifted

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each letter of al one unit to the right The

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computer in the famed futuristic film two thousand won ibm

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or less woz technologies big brother and bill slaughtered it

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Think bill as luke channeling darth well the short of

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it was that ibm cut what was arguably the dumbest

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business deal in history paying the then early twenties darth

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bill to build the operating system for the computer at

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the time the well salary low golf handicapped ibm execs

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were certain that the hard part of building a computer

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was the hardware so they didn't view the software in

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it as being able to be worth much they arrogantly

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believed that their hardware was the be all end all

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holy grail in computer build They didn't worry too much

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about well anything else especially foreign competitors remind you of

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any other industry which also lost it's great power for

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having had so similar arrogance in the seventies Yes hello

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planned obsolescence and the kindly loving auto industry were looking

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atyou Anyway ibm didn't think software i'ii computer code was

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worth all that much And it turns out it wass

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imitate a microsoft charged about two hundred bucks a computer

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for its operating system about one hundred eighty of which

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was pre tax cash profit Yes you hear that right

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ninety percent pretax cash margins if they actually did fair

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accounting that that's how great it was for a few

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quarters in the process of creating that greatest monopoly in

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history gates cajoled outwitted bought outright solar borrowed from and

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ruined literally hundreds of would be competitors In case you've

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been living on mars he created windows the operating system

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for virtually all computers on earth and perhaps mars then

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using the leverage of having created his own quays idol

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language or homebase in that operating system Well he bolted

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On huge business is selling editing and spreadsheet software to

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corporate america in the form of word excel power point

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a whole bunch of others of similar ilk He ended

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up with something over fifty billion dollars in personal wealth

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for his efforts and well who wouldn't be envious of

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that business success Lots of jealous people in silicon valley

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were happy to see microsoft begin to slowly fade away

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with the advent of the internet and that internet thing

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is a big deal It illustrates how hard it is

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to continue to maintain a monopoly in a very fast

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changing world Microsoft is now a famous set of business

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school cases on half myopic lousy management arrogant to the

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changes in environment going on around it can bring down

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a colossus and how corporate cultures don't necessarily scale to

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compete in different environments like microsoft's Environment was a world

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where they would print the operating system on a disk

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shrink wrap it ship it collect their money or they

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would just bull downloaded to the computers at del Hey

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michael dell There how you doing And then ship it

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on out It was a production staying like a movie

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Studio there's a big launch theaters came around and that

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was it Well the internet is like tv that's on

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twenty four hours a day things going on all the

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time you have to just continuously and mark soft didn't

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Ironically the internet did to microsoft the same thing that

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microsoft had done toe ibm more last steve bomber is

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generally thought of as the catalyst in the downfall of

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microsoft having more or less ignored the mind boggling growth

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of the internet In its early days microsoft culture revolved

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around one time sales to cost murs of that two

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hundred dollars product on ly to revisit them Three years

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later their culture simply didn't mash with a minute by

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minute customer integration culture of today's successful web companies So

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bill ended up parting ways with bomber who had at

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one point been best man at his wedding in his

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b f f But they went their separate ways and

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in the vein of great financial overlords of the past

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carnegie rockefeller ford etcetera Gates turned his attention to tax

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optimized donations to do things like cure malaria ignorance and

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becoming cross eyed by sitting too close to the television

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All right well that brings us to build the saint

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So yes he built the greatest monopoly in history with

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the sometimes dubious means and for review winner monopolies great

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people when you own one microsoft grew huge and gates

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went away when the internet came spelling the end of

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his hegemony with the democratization of data distribution all around

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the world Well today the gates foundation although spending loads

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on some non visionary research also happened in nearly cure

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malaria and spend billions on volumes on unnamed charities So

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everyone out there who has donated over twenty five billion

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dollars to charity We're looking out across the classroom in

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the audience here Can you all please raise your hand

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twenty five billion or more Go ahead don't be shy

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We're waiting anyone Hello Is this microphone on Yeah didn't

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think so Well even after he writes big checks for

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paying for his sins bill's got a lot of dough

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left over Just like john rockefeller his megalomaniacal counterpart from

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a century earlier gates feared no evil in his business

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dealings ruthlessly won a desa billion dollar chess game and

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then for whatever reason ended up giving away nearly all

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Of his fortune Go figure But when you d'oh you

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know use an excel spreadsheet They could use the revenues 00:05:46.335 --> [endTime] these days