♪ emily: he got his start at microsoft as employee number 30, personally recruited and hired by bill gates. in over three decades, he went from top lieutenant to microsoft's cdo and is perhaps best known for bringing light to software conferences that will never be seen again. in 2014, steve ballmer left microsoft, bringing his trademark energy and enthusiasm from the boardroom to the basketball court with a $2 billion deal to buy the l.a. clippers. joining me today on bloomberg

studio 1.0, steve ballmer. ballmer group cofounder and owner of the l.a. clippers. steve, thank you so much for joining us. you that iumor about couldn't possibly believe to be true, which was that you were shy growing up. "studio 1.0 that -- steve: that's a true rumor. emily: tell me about this. steve: when i was a kid, if somebody's dad was at home, i would literally stood out in the car because i would be so nervous and shy. college, a friend of mine describes it this way -- hi, i'm steve ballmer, my hand is sweaty because i'm so nervous to meet you. [laughter] over time, that has changed. .mily: it has changed you brought life to software

conferences that will never be seen again. where did that guy come from? steve: that's a very good question. i would say there's a breakthrough, literally, when i was football manager at harvard. that is an intimidating thing to get up in front of football players and the manager is not the loftiest position and you have to speak before a pretty unruly group of 100 guys. that is where i broke through. emily: you were born in detroit, your dad worked at ford. you excelled in math and science and, at harvard, some other kid named bill gates live them all. and you were better at math than him? i think that's an extreme way to say it. on the putnam prize competition, i did beat him our sophomore year. emily: how did you get to know bill? steve: we got to know each other

, eight lunch and dinner, took ,ath class together brainstormed a little bit about what he was doing when he started microsoft. about year after the company ,oved to seattle, he called up i was at stanford business school and he said we could really use a guy like you. inly: you joined microsoft 1980. you were the 30th employee. wasn't there a time during this first few weeks where you are thinking i don't know if this place is for me and maybe i should quit? arguing.ll and i were i wanted to add a bunch of people and build not want to add them. he said you are going to bankrupt this place. i thought why did i drop out of school? bill and his dad took me out and that's where i make up in my head that bill invented this computer on every desk and in every home. he said something like steve, you don't get it. we're going to put a computer on every desk and every home.

i bought into it and stayed for a total of almost 34 years. emily: you are his top inutenant and became ceo 2000. you tripled microsoft's revenue. what was it like taking over from the founder? steve: people like to focus in on when bill was ceo and when i was ceo. this was our baby. he was the senior partner, i was the junior partner. if it was in the raising of children, i would say mom gets to decide more than dad. i take great satisfaction in the things we accomplished throughout the time, not just when i became ceo. we had a miserable year. bill did not know how to work for anybody and i did know how to manage bill. i'm not sure i ever learned the latter. then my life changed a lot in 2008 when bill actually left the company. emily: how so? steve: bill set i'm happy to

help you in anyway, but i don't want you to neatly, if you want me, great, but i have another life. in a sense, i felt like, ok, we are not partners anymore. i have two take accountability and i think i did some of my very best work after bill left. emily: like what? pushed us into pink. sustained us in that investment. we started with office 365. we pushed into the hardware business with surface. and now satya nadella, my successor, is taking things to infinity and beyond, if you will. feel beingdo you asked about your successes and they'll years, what you are most proud of at least proud of? steve: at this stage, i'm almost three years out. it's ancient history. there are some things i wish i

would have done differently, of course. i started a company that had about $2.5 million in revenue and 30 people and left a company that had $22 billion in profit and i feel like net/net, pretty good success. emily: what is your relationship with bill like today? steve: we have kind of drifted apart. he has his life and i have mine. microsoft was the thing that really bound us. as friends but got in mashed around microsoft and since then, since i have gone, we have drifted little bit. when you left, he left suddenly. what really happened? steve: it was not a simple thing for either one of us. day,nk at the end of the probably two things -- a little bit of a difference on the strategic direction of the

company, which i think is a challenge. and number two, he and i always had what i would call a brotherly relationship in the good parts and bad parts. i think toward the end, that was a bit more difficult than not, particularly with a strategic direction change and stock prices are going anywhere, so the rest of the board felt pressure despite the fact that profits were going up, so i think it was a combustible situation. that: does it bother you you don't get credit for that? steve: sure and no. i have the comfort of knowing what i did, feeling good about myself and everything else doesn't really matter. toly: where did you want take the company and where did he want to take the company? steve: i think is a fundamental disagreement about how to be in the product business. i pushed for the surface and he was reluctant. then it came to what to do about

the phone business. said: satya nadella recently on stage that missing the mobile phone was one of the big mistakes in microsoft's history. what would you have done? steve: i would have moved into the hardware business faster. what we had in the pc where there is a separation of chips, systems and software was not going to largely reproduce it else in the mobile world. i wish i had thought about the model of subsidizing phones through the operators. point to theo quote where i said the iphone would never sell because $700 was too high and there was business model innovation by apple to get it built into the monthly cell phone bill. we should have been in the hardware business sooner in the phone case and we were suffering what i would call some of the release ofour vista

windows which sucked up a huge amount of resources for a much longer time than it should have because we stumbled over at. when you have a lot of your best engineers being nonproductive for a while, it takes its toll. emily: would you have bought nokia? certainly wanted to buy nokia. the board disagree and then the company said they should buy nokia. i decided to leave, i believe if executed in a certain way, it made a lot of sense. the company chose to go another direction and that is the decision the company made. i see the stock price flying sky high and all you can say is the market agrees with the direction such as taken the company. emily: how do you think he's doing? steve: i think he's doing a fantastic job. he's building on the cloud and .n's -- on machine learning revenues and profits have been

pretty flat, but that is important to maintain as he read years the place. he has my unconditional support. he has been more open to partnerships and you seem to be. is that the right strategy? steve: i have no quibbles with anything he has done. azure run open source software? absolutely. is it easier for him to communicate that then it would have been for a because i was identified as the competitor? sure. he's taking advantage of it and doing the right stuff. how does life as the owner of a basketball team compared to life at microsoft? ♪

you bought the, clippers for $2 billion. how does life as the owner of a basketball team compared to life at microsoft? steve: it completely different. comparing them may not be the most interesting or valuable thing. i love the game and love seeing us go out there and win, but there's aspects to the job as well. witho i properly interact our coach, our basketball staff, our players? what is my role? we have big decisions in front of us in the arena. where do we go as far as changing the way sports is consumed? not just ott but virtual reality and live statistics in addition to let's go winsome ballgames.

for a what are your hopes new season and not to talk smack, but how do you beat warriors? steve: i watch the warriors get the by 25 points in their opening game. anyone can be anyone on any given night. emily: the cavaliers and warriors are favored to get the finals for the third year in a row. does the league have a competitiveness problem and do they need to fix it? steve: i think our league is pretty competitive. .ver time in any given year, there are players who are different makers. i think it is tougher to win it all if you don't have one or probably two different make -- difference makers. emily: how's the search for a new arena going? steve: it is going. first question is what is out there for available land question mark what would it look like to build the building? we have some good confidence

that we can build building at a good price. in building an arena, but before all is said and done, we will talk to the staples guy. i don't think it ever makes sense to enter renegotiation with a landlord unless you have an option. emily: let's talk up a class you are teaching. you are drilling down on government. i retired in early 14, my wife and i -- has been working for 10 plus years on the issues of child welfare and what does it take to help support in dire who grow up circumstances. takes caregovernment of that. all we have to do is pay our taxes correctly. she said no, we can do better than that. i put 10 years and. so we locked onto things.

we locked in on a focus on kids where theirunities probability of living the american dream, having that sense of upside is great limited. but why the government project? because my wife challenged me. i said i have to figure out what government does. what money does it take in? need to create something like a 10k or investor presentation. we are hoping to publish early 2017. emily: what are the most troubling things you found so far but the numbers? steve: government is making good progress and improvement in many ways. i was surprised how good i felt. not perfect, but much better about government and i came away with two big things. number one, what i call the savings programs.

not the transfers and entitlements, social security and medicare. we have to put aside enough revenue to match. those things have lost money every year since 1980. second, that will help us get the debt under control. jives withhing which what my wife said, there are communities of people. let's say you are born in the bottom 20%. if life was perfect, there'd be a 20% chance you stay in the bottom 20%. but there are communities of people where that number is over 50%. that is just not ok. every kid should at least have the opportunity. what does it take for government and people with philanthropic and civic resources? kind of investment in not -- it -- not for profit has been entered in, but when you look at government, a lot of

things are going well, but something's really not. emily: the work you are doing and philanthropy compares to what mark zuckerberg is doing. tk to me about ere you are going and who you are looking to help. steve: there are some great not for profits doing good work. we're trying to find those who operate nationally and support them. that's number one. number two, we are very bullish on what they call place-based strategies, where you bring a community together and challenge everybody. number three, we are going to focus on certain cities. the one we have a connection to his seattle because we live there. l.a. because we own a basketball team there, and detroit, because i grew up there. so we will have geographic focus. when you joined microsoft, you didn't get a single share. is that true? ♪

emily: you mentioned you could never make the math work on salesforce. what do you mean by that? steve: it's too expensive. it's a fine company. as a great company? i don't know. in my opinion, relative to earnings potential, it is radically overpriced. that's my opinion. emily: are you headed for a disaster? steve: the company is headed for a disaster.

the market will ask companies to make profits commensurate with their market cap. amazon does not either. they have great potential and it's a great company, but when will the market demand that? i can't say. when will it demand it from salesforce, i can't say. emily: is amazon getting a pass from wall street? steve: i think they are, because people believe powerfully enough in the future of earnings. but you can't tell me over the long run that market cap and earnings are divorced. my marketagainst view. emily: you are still an investor in twitter. when you announced the stake, it was 4%. do you still own as many shares in twitter as you used to? steve: i think it's fair to say investor inarge twitter. i think twitter is an area producible asset. i don't think there's any vehicle that let you speak broadly to amass audience better

than twitter. be easier toduct use? of course the product could be easier to use and i think that is an important area. you see twitter having a future as an independent company? steve: i think twitter would be great as an independent company and our acquisitions that would make sense for the company, the product and shareholders. emily: what about going private? steve: going private is a distraction. they would be better served putting their money into innovation that all the work you take to go private. -- whathat about that about jack dorsey having his two jobs? steve: i think it's easy to question. people like me would like more out of twitter. clearly divided in the way jack spends his time, as a shareholder, it would be reassuring if he was entirely focused on twitter. i would like to see them work on the things they need to do from

a product and cost structure standpoint and be open to opportunities, to be independent, and to make a sale of that seems appropriate. emily: when you joined microsoft, you didn't get a single share. is that true? steve: that's complicated. i never had stock options. it's written on wikipedia that i made money on stock options. i had three quarters of the company and that's been the source of my ownership. own like 4%ou still of the company? steve: i still own what i own. that is not a thing i disclose. with the stock at 60, you have to consider how good a job satya nadella is doing. emily: you held onto your shares. why have you held on to them? steve: i believe in myself. i owned a company that i believe in and it's worth a bunch.

the recognition in the marketplace of the value was not necessarily recognized during my tenure, but it is now being recognized in session at della's tenure. i made a great investment by holding and i have a lot of loyalty. when i'm working at the place, if i start selling, what does that mean? it means i don't believe in the future of the company. i believe people on boards or who work for companies at least in leadership positions, they should have told all their stock. emily: at what point do you think you myself? steve: that will be a decision i get to make. the longer i get out of the company, the more it is not mine anymore, the more i look at the value of the stock in what we are doing will improperly, these things will change. 26ly: we have calculated ilion dollars. how do you manage your money and investments when she get to that

level of wealth? simply. do a pretty i own microsoft, i own some twitter, i own the clippers, and i own a bunch of index funds. emily: comparisons have been made to you and tim cook, who also took over from an iconic founder and ceo. what do you make of those comparisons? steve: if you write it down on a piece of paper, founder replaced businessunder, more oriented ceo, the comparison is perfect. if you say most of the revenue and profit was generated under my watch, yes. tim's watch, yes, those things are true. i think people are trying to extrapolate that to and during the tenure, new product assets were not built. wemy own case, i would say got going in the cloud, got started in hardware and build assets in machine learning and artificial intelligence. so we were building those

assets. apple is a lot more secretive. i can tell you what assets he's building were not building. the jury is out on everything, but the worst thing anyone says to me is if i'm being compared to a guy who has done great job at apple, so the it. write what do you want to in chapter two of steve ballmer? fun.: i want to have the work i'm doing in all of this data, call them civic contributions. the work we are doing with the clippers can be important angelesy inside the los area. i don't want this to sound silly, but spectator sport itself was not really my deal. i love watching my kids play and the clippers are more similar. i know the guys, i cheer, i see myself as an energetic guy but who very thoughtful, a guy has come from being shy and nerdy to a guy who is not.

the ability part is to think through hard problems and hopefully make a difference. ceoy: steve ballmer, former of microsoft and owner of the clippers, thank you for being here. steve: my pleasure. ♪

♪ emily: he is known for shunning convention, taking massive risks, and investing in black swans, companies with a near complete chance of failure. if they succeed, the world will be changed forever. vinod khosla grew up in india. his parents agreed he could explore his curiosity these with no limits as his grades didn't suffer. he began by founding sun microsystems. he helps entrepreneurs take the sameks