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Principles of finance ah la shmoop bill gates A tale

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of two men Ah bill sinner saint or both Well

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depends who you read We'll start with the bill as

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sinner Side of things Billy boy took advantage of poor

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little ibm in the late nineteen seventies And yes back

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then in technology ibm was like google plus facebook plus

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apple today Big fat behemoth enormously connected in the highest

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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

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