>> for mayor studios in new york city, this is "charlie rose." >> we begin with an appreciation

of designer oscar de la renta yesterday. later this week we will have a full appreciation but tonight, we remember what an inspired life he lived appropriate for a man who began life wanting to be a painter as he told me in a conversation. i went to art school in the dominican republic. at the age of 17 i went to spain art training. it was when i was in spain, i come from a big family, i am the youngest of seven and the only boy. my father was in the insurance business. i did not see myself in the insurance business. fashion in spain

because i could draw very well and led me to fashion houses. greatest designer of our time, balenciaga, he offered me a job to go work as an illustrator in his house. that is really the beginning. i never went to fashion school. i would to the very best because i had the opportunity to work in wheree where i could see the close were made and constructed. , i could be a fashion designer and paint at the same time. dead at 82.la renta we remember his family and especially his wife, annette, who was with him at the end.

steve ballmer is here, the owner of the los angeles clippers. he purchased the team in august for a record $2 billion. he was previously ceo of microsoft for 14 years. he is the largest stockholder. i'm pleased to have him here to talk about technology, microsoft, and other things. this is the cover of "bloomberg is this week -- businessweek." i see a guy who likes basketball, could have played basketball and looks like a power forward to me. look at his eyes. they are set on the basket. am i right so far? >> you're getting me a little too much credit, charlie. >> you love the game. >> i do love the game. guy with a are, a

lot of money and you have left microsoft and you are looking around for what to do. you had previously tried to buy an nba franchise unsuccessfully. you look at milwaukee and it did not happen. and then you find out about the l.a. clippers. how did you find out? what did you do? >> it's kind of funny. i had looked two or three times, which is an important part of the story because i knew what to look for. i had looked at numbers. i had gotten my mind around it emotionally. i had been talking about her for 10 plus years. at buyinghard run sacramento and moving it to seattle. we got turned down on moving it. i was running microsoft so i was a backseat partner providing financing but i wasn't really driving. day i retired from microsoft earlier this year,

pretty much that day i went to go see the commissioner and talk to him about teams. >> the same day you left microsoft? herethin two weeks i was to see adam silver. he said it was unlikely to see any expansion in the league. they were not working on it anyways. it's difficult. they're trying to help cities keep their teams. i set a better look at milwaukee because it was for sale. would be toor me get someone in seattle. also as good would be to buy a team in l.a.. have thee, you problems of movement and expansion, not likely and in los angeles, they are just not going to sell. i love l.a., really. about a month and a half after that, maybe two months, saturday morning my son in college gives me a call and says, dad have you

seen these tapes from the clippers? i don't know anything you are talking about. the clippers are going to sell and you have to be ready to move. >> that's a son you would like to have. he was like a pointer for you. do about it?u i spoke to the commission are like every other prospective buyer did. they said it's better if you could buy the team because they were not engaging. i was calling around everyone i knew. do you know the starlings? best would be to buy the team from them. games because i had never been to a clipper game. i was supposed to go with one of my other sons earlier in the. we got our schedules all goofed up so i went down to watch them play golden state, oklahoma city. finally i got the opportunity to meet with mrs. stirling. -- sterling. >> how the conversation go?

>> it was another of my son's basketball tournaments and i said it was very interested. she just received a call from a mutual friend, michael eisner, who had run disney. tosits courtside right next shelley. he shares those seats with bob iger. this guys haul. i'm very interested in buying your team. i would love to come talk to you about it. i don't even know how disposed to make the bid. me said you can give it to over the phone. wanted to come see me tomorrow? sign. we set it up. i flew down there to have dinner with care and had a bunch of offers with me. >> a bunch of offers? >> different ways to structure the deal. i had four or five. her lawyers basically said have a meeting and we will run a formal process for the team. i left all the offers in the

briefcase. i pulled out a piece of a per. normally i use my tablet. she's an older lady and that her nephew starts teasing me. where's the tablet? you are mr. microsoft. we talked about basketball. they told me what the process was going to look like. >> did they talk about numbers? >> not in that first meeting. then we start talking to her people, lawyers and bankers. they gave us a bit of a sense that it was not going to be a cheap deal. i decided to cancel everything i had and stay in l.a. for the week. i did not leave until the deal was signed. mucome people you paid too h. you think what? >> ioan microsoft stock and i owned an index fund,.

it's global. think of it like a global index fund. it's a market fund. directing my investment in the clippers will be as good an investment total return of the s&p fund? i believe it will be. ,f you compare to tech stock real earnings, a guaranteed position, just less upside. makered to an index fund, money, make profit on that. will it appreciate? the next guy who buys this team it withie will buy stock. as long as the s&p index goes up, people love l.a. if anyone 30 years from now, you could be talking about buyers from anywhere in the world. >> hollywood, california. asset, beachfront property in the nba. each frontyou want

property? why did you want to own a team? sometimes the common conception or conventional wisdom is one more rich man who wants a toy. >> yes. of it.an element everyone who gets involved has to love the game. it's silly to own a sports franchise if you don't love it. why? you have to have passion about it. you're going to get some level of abuse. your team wins. your team loses. i love basketball. i love the athleticism, the speed, the action. i love the fact that every player has to make a decision about something unlike other sports where things are a little more script did. i think it's great. >> one of the first things you do is you go to doc rivers and say, i've got a contract here. like that.e doc had been in discussions with the people who had been assigned to run the team.

>> to extend? >> they were installed by the nba. the arsons used to run time warner. they really don't want to make a long-term decision but it had started. had gotten to know each other. we never talked about the team. we were not allowed to talk about it under nba rules but we got to know each other and i knew that he would like to make a longer term commitment so we worked it out pretty quickly. friend oftalk about a yours, paul allen, cofounder of microsoft. he won the super bowl. i interviewed him. we talked about this. very smart have a philosophy about it. he loves the team and mostly involved in the big decisions she has a guy who runs it. he's not trying to act like a general manager or the coach. the data model do you see for yourself? >> i do, in fact.

if you look you has trained me as an owner, i've talked about all for owning an nba team for 25 years, about when he bought the blazers. he tells me it's good, how he does it, what is formula is. who else trained me? paul,ghbor who works for the carroll. he said if you ever want to come down and hear from john schneider are general manager on how we do it at the seahawks, would be happy to tell you. they espouse a philosophy that put forwardly you that paul has. that's a good role model to copy. in football, that's pretty darn good. >> have you spoken to sterling? >> i really only spoke to shelley. at one occasion as was chronicled in some of the tabloids, i did go to visit him and have a chance to see if we

could get things done without the lawsuit part. a perfectly pleasant meeting but nothing happened. concluded -- >> she had the right. >> you own it 100%. looking at sports today, i'm thinking of domestic abuse in .he nfl, ownership era is there a problem in terms of the way we approach the adulation of sports stars, how we pay them, and whether we need something else here to make sure these kinds of things -- because of who they are and the public attention they draw? >> i'm a huge believer in the positive power of sports. whether you wind up playing a professionally or not, it's

hugely valuable for people to learn and be a part of a team. the elite players, the people who do turn professional our inspirations in more ways than we can talk about. i don't think that's a bad thing. statistically, not everybody will be necessarily exactly the person any parent would want their kid to be. statistical a truism. how do you deal with the fact that there are people whose jobs are to be inspiring people and yet they might not be perfect role models? trying to address that. it's going to happen. i don't think it takes away from the fundamental value of sports as an inspiration to kids to perform, achieve. >> sports leagues have responsibility because of everything you just said. they ought to be on the cutting-edge of being the most alert and attentive to those social issues. >> it was not a player, but it

was a senior person in the sport and he said it's not ok. >> suspended for life. it's not ok. that is excellent. that kind of decisiveness is hard to show when you just have to say he did a great job. >> if you had not done this, what might you have done? you teach at stanford two days a week. >> my class is now done. >> utah and leadership which i want to get to in a minute. >> and i enjoyed the heck out of it -- you talk to leadership. aheard you went out and got bunch of golf lessons. >> it's useful. >> just buy a golf pro. that's what i would have done if i was worth your money. >> i went out for two afternoons.

it's not a big deal for me. >> you want to be a winner. are three things i see myself primarily involved in. one is owning the clippers. that's not full-time. two is to seek a civic contribution that i can be proud of. i don't know what that is yet. andou have to ask questions understand. there are enough things functional in our government that someone who's not a politician might have a role to play. i'm working my way through that. number three, i'm obviously a tech investor. i'm not an angel. i am in big chunk of microsoft. >> the biggest there is. >> not in an index fund, but i do. when you look at microsoft, tell me how you got there. gates when we were

sophomores in college. we were friends at harvard. >> roommates? >> down the hall my sophomore year. he started microsoft with paul allen. >> in albuquerque. >> then they moved back to seattle. i graduated from harvard. bill didn't. he dropped out. >> he got an honorary degree later. >> i stayed in touch. i went to visit him in albuquerque and then i was back at stanford business school. he called and said we kind of need a business guy. too bad you are in school. too bad you don't have a twin. i could tell he was flirting. i had decided i would drop out and if things didn't work, i could always go back. >> first year of business school? >> end of my first year. i moved to seattle. >> how many employees when you signed on? people.

revenue was $2.5 million. own 10%e allowed you to of the stock at the time? >> i came in and it was not even a corporation. it was a partnership. i got a partner share. 10% of the growth in profits over 1979. that was my deal. we incorporated the business a year later and translated that into a founding interest in the corporation of 8.75%. >> if you are writing a novel, describe paul allen on one hand and bill gates on the other. in steve ballmer on the third. who are these three guys? smart, very very .urious guy, very creative guy

he is an idf firer. -- idea firer. he ignites ideas. you wills good a brain ever find. he processes everything. he can store lots of information in his head. ofhas a great sense competitive strategy and he is just a force of nature. i am more like a locomotive, the engine that just turns and keeps things moving. >> you brought what to the company? >> i was the business guy. "business." >> not simply that we have an operating system -- >> when we started we did not have an operating system. >> what did you have? >> language software and a piece of hardware. we did not have ms dos, windows, operating system.

that came after i started. the question was there was more to do than bill could do it. he wanted to have time to focus so i came in to do the business stuff. hired spurs.ed, i did all the recruiting for three or four years and convinced bill that we could grow without going bankrupt. that was our first big fight. was i just there to bankrupt them? the way he would put it? are you here to add business or bankrupt me? >> i did not ask you to drop out to bankrupt this company. >> quote unquote. [laughter] >> pretty much. i could wear a tie which was uncommon so i became the account representative on the ibm account when they decided they wanted to build a computer shortly after i started at microsoft.

stop was about finance, human resources, sales to ibm. that's kind of what might the strap was. -- what my bootstrap was. >> i want an assessment of your time at microsoft before you were ceo and after. a lecture about what you have done at microsoft and what you intended to do, what you have learned from that experience. let's go to 30,000 feet and looked down. i was basically either top dog or the number two dog for most of 34 years when we went to to 80 billion, 30 people to 100,000, no profit to $28 billion before taxes. >> pretty impressive. i am unique in this world.

and that's not about ego. work.done great bill gates, obviously. steve jobs, obviously. they are amazing. and i was not just a passive participant in the ride. i look at the body of work and feel really good. i don't distinguish in my mind for me.and after" that was important but there was before bill left, after bill left, before i got involved on the technical side in the early 1980's. it's more of a body of work in my mind. feel good about it. with hindsight, are there things i would do differently? of course. >> like what? doingould have started is hardware earlier so we could've been more effective in the phone business. should microsoft have a position in the phone business? profitable, we were

the number one most profitable company in our business, two guys passed us and they both did it by making phones, apple and samsung. i don't think software was the right play but apple, samsung, and microsoft. for years of his microsoft and some others. do i wish we had done that sooner? of course. >> why didn't you? when the name of your company is microsoft and/or formula works, we are software guys. bill gates told paul allen what he wanted to do hardware back in the 70's, we are software guys. religiouswas a transformation. we always had a little hardware, and mouse, the xbox, but the big step was doing the surface. that was a big step. we bought nokia after that. the biggest up was doing surface. partners.

i love hp, dell, lenovo, but there are things you can do and be or complete in your vision, your feedback loop is tighter, customers tell you what they like and don't like much more quickly. i don't regret the journey or the fact that we are true menace the profitable by making operating system software for pcs, but relative to new form factors, like the phone, we should have moved faster. >> you make the argument that because your culture was about software, your dedication was software, it was what brought you there. >> absolutely. software is also the magic in the hardware. it's not even like you abandoned software. it's how you address it and make it beautiful. advantageous, particularly in these very small form factors to do hardware as

well. not required. samsung does not make the android operating system. it comes from google. google just tries to monetize through searches. in most businesses today, this is trying to become more direct with their customers. that's a theme on the internet. we were building software to sell to harvard guys to sell to retailers to sell the consumers. -- to sell to hardware guys. the feedback loop had two layers at least of people who wanted to change and morph it. apple built the hardware in the stores. they were direct. there was not two layers. samsung built the hardware. they basically took over android from google and build everything. that was their experience. indirection is tough. in this century, people are learning to be very direct with

their products. ♪

someone told me that yahoo! had a chance to buy google early on. larry wanted to go back to business school. >> i know the price. $1 billion. >> larry and sergei wanted $1 billion. like $800they offered million and they said they wanted $1 billion. that's the price. capitalism, but here's one. did you have a chance to buy google? aid you ever look at it? >> we never did. >> i just know a smidgen of technology. you guys had been sitting on a

ton of money. you did not buy that many big things. buying big things is hard. buying big things that are real thought.ires you have to know what you are doing. we made more runs at things. because of our issues with the european competition commission, we spent a lot of time on that. we made a big run at yahoo!. >> bill was still hanging around. >> he was still there. offermade a $33 per share

. 40 but said they wanted i don't know that they would have taken 36 or 37. >> i told that to the guys. if you could get me to do beyond the decimal point but i'm not going beyond $33 something. you've got to be disciplined doing this. you have to be. you guys were ahead of the game on many things. even speech technology. you had the best computer scientists because you were the did -- >> still are. hardware. make the it's hard for people to understand just how profound

that is. you have to have a way to go to market. you have to have a feedback loop with the customers by being direct. touch technology, pen technology these are fundamental and we were going through many layers of indirection. flourishare has to through the lens. where did we give it right? >> you need to have the connection with your customers to get the feedback so you can see where the reality of the world is. i recently went through this. i was doing a deposition for a case microsoft is still involved in but it is similar. i had to go back in the deposition and they're showing me all of these memos about

microsoft in and mobile technology back 25 years. really knew what was important and we never found a way to get into the loop. there was one thing we missed this. it turns out the world right now will say the finger is even more in porton than -- important than a pen as an imput. low-cost processor in the finger. a lot of money has been made on that. it anddid steve jobs get gates and ballmer didn't? >> there might be many reasons. n b -- who knows? i will give you a fundamental

one. they were going to try this differently than we were. they got it right there first pass. that is a fundamental but areristic fundamental characteristic is getting to market, get the feedback, and improve. sometimes we don't get it right until the third version. we're just going into it with surface and the phones. we actually have a software and a hardware muscle and if it takes immigration, apple was going to get there. they were born that way. we were born on the software side by pushing indirectly. >> you were on your way there now. >> i own the stock. cut me open and it says microsoft all the way through.

don't have blind faith. you have more at stake than anybody else. >> there are two fundamental capabilities. in my stanford class, one of our was justor topics called capabilities. how do you build new muscle? the weightetting in room. microsoft, we had to build muscle not just in software, but building in the cloud. of three or four with muscle there. we are one of the only who have muscle in consumer hardware. who else is really trying to do these things? maybe facebook or google. you have to have capabilities.

we have genius people. we have incredible cash flow that gives us permission to do things. to buy things and build things. these my best years contributing to microsoft. >> you did more value-added stuff than you did in the first eight or even your previous life. best work was probably between 1980-1986. then the last would have been the last. what did we do? cloud capability. we developed a machine learning capability in bing. we grew our profits. we did all of that. phones.ot do

when did the iphone start? 2007? that was some of my best work at microsoft were probably those first six years and my last six. >> finally getting into phone? we got into cloud. 2008 we did not have -- >> jeff bezos started out with e-commerce and look at what he has now. >> what does he have? amazon is a nice company. they are in the cloud. they make no money. you're not a real business unless you make some money. i have a hard time with his this is you don't make money at some point. what -- but amazon is 21 years old? they haven't of stockholders who think highly of what they are doing. them, but if i was a

shareholder? it's an expensive company. market is $150 billion almost russian mark eventually someone will think you will make -- arcade is $150 billion almost? they don't go by reported earnings and they plow back. look at the enterprise system they've developed. this is not their core competence. >> they have built capability. i will give you that. one capability every business is expected to have is the capability to make money. certain kind of discipline, a certain kind of mindset. ultimately, if you don't have the capability -- >> you are not sure it's there? look, i like the people. they are fine. as a businessman, i'm proud of

the van that i made 200 $50 billion under my watch ceo. madew in our industry -- i $250 billion. product is everything but product that makes money is important. you took over as ceo, the market cap was what? $600 million? >> when you left -- $600 billion. >> when you left? >> $200 billion. >> where'd it go? come on. >> that's a silly measurement. the market was in a froth. it was silly. the market was silly. if you use the market is your measure of success, you will do

silly things. our profit tripled in that same time. $9 billion tobout $28 billion. >> why did the market not appreciate that? -- wayp/e was too hig h-h too high. low because people did not know if i was making good investments or investment they would think are folly. we have one activist investors have a really good business that nobody focuses on, our enterprise business that i started and did a pretty good job with because it makes 70% of the money. >> 70%? >> roughly. they wantes over and to give it a great look. it is a good thing.

it is the advantage of newness. having people give a fresh look -- >> that is the advantage. in terms of the management class, you have about 10 years. then bring somebody else and. >> i had 34. [laughter] it was great for me. >> it sure was. >> for anyone who assesses numbers, ity the was great for everybody. >> would you rather have google, apple, microsoft or amazon's hand? >> definitely not amazon. it starts by defining the problem set.

it depends on what your timeframe is. if your timeframe is one year, i would take apple because they have the most earnings. 30 years, iframe is would probably take microsoft and google. pick microsoft over google because i am completely nonobjective. decision abouts nokia have to do if you leaving microsoft? i had looked at buying phone companies for a few years. i started surface -- >> the tablet. >> pc that the tablet, tablet that's a pc. i establish that was some discomfort. didn't love it.

the board was not sure about it. they went along. i was sure we needed to go this direction about probably 2009 or 2010. we needed to go further and faster particularly with this, so the first half, with the board's knowledge, i was having discussions with nokia about possible acquisition. they were already our partner. all windows phones were being produced by nokia anyway. where would that partnership go? the best thing to do for the partnership to strengthen our position would be just but the companies all the way together. i walked the board to right-thinking. a board set of discussions and we came to a meeting that ended up being a little tumultuous. details are probably not that important but there were some

weird dynamics around it. it was not just about the marriage argument. we did not get -- it was not just the merits of the argument. >> was it you and bill? >> not worth going through. essentially, the center point of the future. we are going to be software guys for our lives but unless we i had spent four or five years, to a point of view that my number one mistake was i didn't get there sooner. this is reallyd, important. while the board ended up agreeing with that -- >> they bought nokia. i said i would probably go whether you buy it or not. >> you had already said that? why? had enough negative

tension between us that it would be better off giving it to a new leader. if the board wanted to by edward did not want to buy it, it was important to my strategy and if you do not have support for your strategy, you should go. the board decided they liked that and bought the business knowing that i would probably say it's a good time to hand off the leadership. >> it sounds like everybody signed onto that idea. you had decided for the reason you just outlined that you are leaving. >> at that stage. there's an advantage in this next generation of microsoft, cloud first, mobile first. i used to call it devices and services, our new capabilities. world, let the new

leader build this from the get go. of the absolute leaders below me and building out our cloud footprint in every sense because he had worked on baying and our other cloud properties. guysd a couple of internally that i love. we had some good external candidates. weirdard goes through nine amex. he was the only internal candidate left in my favorite. know --body wants to you know this -- how much of this had to do when you became with what the relationship was between you and bill? >> it's a complicated thing. 14 years ago, almost 15, bill

had asked me to become the ceo. do your really want me to be ceo? i was perfectly happy being president. if you really want me to be ceo, or is this a fake thing? we spent one year arguing. deputy.ow to be his he said he wanted to switch that. i did not know how to be his boss and he did not know how to be my deputy. i'm not sure we ever really figured it out. we got through a very tumultuous year in 2000-2001 and we sort of settled things down but the manager was never quite the same. if you look at it, i would say probably the least to the years for me at microsoft were those first few years as ceo. they'll and i were out of rhythm.

the product direction was out of rhythm. that is when we did our vista release. our least successful work was in that time when we were working together in the early 2000. that is when both of us did our least good work. >> because you could not get -- >> is a combination of a lot of factors. six years later, bill announced that he was leaving. >> it was all up to you? >> we had two years where we transitioned. see things differently? we now know how you felt strongly about the idea of connecting to the consumer. did you lived together and have two separate philosophies, two

separate worldviews? oversimplifying it. it depends on the year. it was the most successful in business history. at the business, the profit stream, the growth. for every year that bill was full-time, we had -- >> would you view it as a complementary relationship? complementing your weaknesses and your strength complemented his. well.did not work as that is when we did vista longhorn. some of the worst windows work we did.

bill as technical leader in me as ceo. that was not our best. i've done some of my best work in the last six years after bill left in the 20 years before that. it's hard to argue. we did a great job. tough time in 1980-1981. >> what was that? >> bankrupting the company, firing people. >> did the antitrust suit three guys off your game? -- throw you guys off? >> it was far more impacting on bill than me. the whole company had some distraction by it. we are re-going to be broken up -- were we going to be broken up? rules, the european commission

-- it was distracting. emotionally it affected bill more than me. it's one reason why he wanted to flip things around and have me take over as ceo. if you look at the timing, it's not surprising. it was plus or minus the time ordered us to be broken up. how old are you? >> 58. >> you are the largest stockholder of a huge and profitable company. this gives you an opportunity to do a thousand different things. it you just achieved a goal that you thought about and made efforts. you have a basketball team in a place that you love. >> i'm fired up.

i'm very happy. i love being a microsoft and not everything was known about how we were going to do x, y, or z. i have total free will. i get to decide completely how to spend my time. i get to find out whatever it will be that will really get me charged up. to me it isll, scary but it excites me. >> some of us are able to do it and some of us are not. it is something we owe ourselves regardless if people are not at your income level, the chance to be able to look back. we have one time in life. themany of us get hot up in treadmill and do not stop off for a moment. i have this image of you lying

in bed with your surface. clearly it was not an ipad. >> surface! yeah! by microsoft! >> i bet you have an iphone or an ipad somewhere. >> i do not! i do not! my children does not! my wife does not! >> the clippers? >> individually they can do whatever they want. anything the team bios? -- anything the team buys? come on, charlie! we will buy microsoft with my money! [laughter] >> there's an image of you on his all 6'5" of him with surface on his chest. watching -- because he fell in love with -- a cbs show. [laughter] >> i'm 5'11".

i used to be over six feet. i love that show. "the good wife." it washristmas time, time to start the transition but we were not quite ready. i did not want to start anything new for what might be a month except that i started "the good wife." i'm like 106 episodes in. it is a heck of a series. >> people in the new yorker say it's one great show. thank you for joining us. i'm in adelaide, i'm going to watch the clippers. -- if i'm in l.a., i'm going to watch the clippers. >> email me. >> steve ballmer joining us. see you next time. ♪

we score some tickets to attend talk but there's a new drama obama show barack starring barack obama and produced by the gop. here's just a sample. >>